MEDIA REACTION: U.S.-ROK FREE TRADE AGREEMENT,

UNCLAS AIT TAIPEI 000777 SIPDIS SIPDIS DEPARTMENT FOR INR/R/MR, EAP/TC, EAP/PA, EAP/PD - LLOYD NEIGHBORS DEPARTMENT PASS AIT/WASHINGTON E.O. 12958: N/A TAGS: OPRC KMDR KPAO TW SUBJECT: MEDIA REACTION: U.S.-ROK FREE TRADE AGREEMENT, U.S.-CHINA-TAIWAN RELATIONS ¶1. Summary: Taiwan's major Chinese-language dailies focused news coverage April 7-9 on the suspicion that China's "Internet army" may have hacked into home computers of senior officials from Taiwan's University of National Defense, planted a Trojan Horse virus, and gained access to classified information, including the Yushan war game, the Hankuang no. 23 military exercise and the Posheng project. Another focus of news coverage was on a villa of the late President Chiang Kai-shek on Yangmingshan that was burnt to the ground on Saturday morning, apparently by arson and allegedly by pan-Green supporters who were influenced by President Chen Shui-bian's campaign to uproot Chiang's legacy. ¶2. In terms of editorials and commentaries, an editorial in the pro-independence, English-language "Taipei Times" said that the U.S.-ROK Free Trade Agreement surely will have a negative impact on Taiwan's economy and called upon Taiwan manufacturers to enhance their competitiveness and quality. An editorial in the pro-unification, English-language "China Post" said that TECRO Chief-designate Joseph Wu's wish actively to lobby the U.S. government to treat Taiwan 'fairly and equally' will not help the opening of cross-Strait direct transportation links, since Taiwan cannot avoid responsibility for the lack of trust and bad atmosphere that has stymied the chances for talks under President Chen's administration. End summary. ¶3. U.S.-ROK Free Trade Agreement The pro-independence, English-language "Taipei Times" [circulation: 30,000] editorialized that (04/08): "It would be difficult to overstate the likely impact on Taiwan of last week's free-trade agreement (FTA) between South Korea and the US, because South Korea and Taiwan produce many similar products and are rivals in key industrial sectors. "But the strange thing is that few -- especially in the media -- saw the issue as being as serious as trade officials and analysts did. Most daily newspapers last week displayed such an indifference to the trade pact [that] it was as though it had never happened. Instead, these newspapers were reporting on the campaign activities of the potential candidates for next year's presidential election, the proposals to allow auto and horse racing and politicians 
bickering over issues of ethnicity. "On the bright side, the South Korea-US trade pact could encourage the US to develop more bilateral free-trade agreements in the region, as countries fear they may fall behind in the race to cut trade barriers. "Most importantly, though, if the pact is ratified by lawmakers in both countries, South Korean companies will receive advantageous access to the US market, which would in turn put many Taiwanese firms at a potential disadvantage. In other words, it would not only make South Korea's economy more competitive but also result in US trade being lost by Taiwan and gained by South Korea. "Based on a study conducted by the Chung Hua Institute for Economic Research, approximately US$2 billion worth of goods are shipped to the US from Taiwan each year, goods that could be replaced by those from South Korea. "Those US$2 billion goods are likely to be shipped from South Korea once the lower, or zero, tariffs agreed in the FTA take effect. That would represent a potential loss of approximately 5 percent of Taiwan's annual shipments to the US, or 0.5 percent of the nation's GDP growth. "Some economists have warned that a South Korea-US deal would negatively impact on Taiwanese firms, particularly those in traditional manufacturing sectors such as textiles, automobiles, bicycles and shoes, and urged the government to accelerate its own trade talks with Washington. Others believe that Taiwanese manufacturers would be able to survive the South Korean competition as they have shifted production offshore to retain a price advantage. "The South Korea-US trade deal is likely to increase the pressure on other Asian countries to seek similar pacts, and, as long as Taiwan's economy is heavily export-oriented, it also needs to negotiate similar pacts with its trading partners. "It is lamentable that the 'China factor' has been used as an excuse to slow the progress of the nation's FTA negotiations, and so far Taiwan has only managed to secure FTAs with some Central American allies, including Panama, Guatemala and Nicaragua. But the trend toward trade agreements is not going to stop and the government needs to catch up and better prepare for the imminent changes in trading patterns that these agreements will bring. U.S.-CHINA-TAIWAN RELATIONS "Whether the plan is to achieve FTAs with other countries or the nation looks to join a Free-Trade Area of Asia Pacific -- a free trade area proposed by APEC leaders at their summit in Vietnam last November -- the government should study the South Korea-US deal carefully and use it as a starting point for their future talks. "For now, the government should be watchful, because, with no immediate possibility of new trade pacts, large Taiwanese manufacturers may well respond by shifting even more production overseas, adding to concerns about economic isolation. As for the future of Taiwanese firms, without the promise of FTAs to remove tariffs and other trade barriers, all they can do is to strive to enhance their competitiveness and quality, nothing else." ¶4. U.S.-Taiwan Relations "'Treatment' is not the Issue" The conservative, pro-unification, English-language "China Post" [circulation: 30,000] said in its editorial (04/08): "Once again, it appears that ideology is clouding the thinking of our high-ranking government officials. On the eve of his departure for Washington, Joseph Wu, the new de facto ambassador to the United States, told reporters he would actively lobby the U.S. government to treat Taiwan 'fairly and equally' after taking up his new post. "Wu, the former Mainland Affairs Council chairman who is known to be close to President Chen Shui-bian, told reporters that ordinary people in Taiwan generally feel that Washington has not treated Taiwan fairly. "As a glaring example of how the Americans are purportedly treating us badly, Wu noted that a U.S. official who recently visited our country pressed us to lift our longstanding ban on direct transportation links with mainland China. "According to Wu, our American visitor 'missed the point,' since our government has repeatedly expressed its desire to negotiate direct transport links with Beijing and never gotten a positive response. "Wu told reporters that if Washington really wanted to see cross-strait transport links opened up, the United States should lobby Beijing to open talks with our government so the technical details of transport links could be worked out. "While Wu means well and we are sure he intends to promote our interests, it is clear to see that he views the world through ideologically tinted glasses. "In the narrow world-view of Joseph Wu, Beijing is solely to blame for the fact that both sides of the Taiwan Strait are not talking to each other. "While Beijing remains politically hostile to our government and shares some of the blame for the lack of talks, we cannot avoid responsibility for the lack of trust and bad atmosphere that has stymied the chances for talks to take place under President Chen's administration. "That is because every time a tiny thaw has appeared in the icy relations between Taipei and Beijing, President Chen has done his best to make sure they go back into a deep freeze. "When Beijing pragmatically offered to sidestep political sensitivities by having representatives of private aviation associations negotiate details about direct links, our government refused to go along. "In the meantime, President Chen has deliberately irritated cross-strait ties by taking steps toward de jure independence every time an election is around the corner. "Besides tossing a monkey wrench in the potential to resume cross-strait talks, these actions have also become a major irritant in our relations with the United States. "Since taking office, President Chen has all but abandoned his momentous 'four noes and a not' pledge made at his inauguration in ¶2000. "In that speech, President Chen solemnly promised not to declare independence, not to change the national title of the Republic of China, not to amend the Constitution to codify the existence of two separate states in Taiwan and mainland China, and not to seek to hold a public referendum on sensitive issues of independence or reunification that would change the status quo in the Taiwan Strait. U.S.-CHINA-TAIWAN RELATIONS "In that same speech, President Chen promised that there was 'no question of abolishing the National Unification Guidelines and the National Unification Council,' the advisory guidelines and body that had formed the basis of our policies toward Beijing before President Chen took office. "Since these promises were mainly aimed at reassuring leaders in Washington and Beijing that President Chen's government would not make radical changes, we should not in the least bit be surprised that our friends in Washington are not pleased with us right now. "Indeed, just about the only part of 'four noes and a not' that has not been smashed into pieces is the promise not to change our national title of the Republic of China. "Since the United States needs Beijing's help to cope with major world crises ranging from Iraq to Iran and North Korea, Wu should not be shocked to learn that sometimes our friends in Washington would like to see us stop rocking the boat at every opportunity. "The reason why Washington wants us to open direct transport links with the mainland is because the U.S. government is, as it should be, primarily looking after American interests. "We find it especially odd that Joseph Wu thinks that our problems can be solved through lobbying foreign governments, rather than by making our own wise policies that produce good results. "The reason why cross-strait transport links have not been opened has little to do with our poor treatment from the Americans, and more to do with our own incompetence. "If our leaders had done less to shake up the status quo in the Taiwan Strait for the sake of scoring votes in local elections, direct transportation links probably would have been opened long ago." WANG